A potential game-changer in trademark registration proceedings

In trademark infringement litigation, the critical and usually pivotal issue is whether there is a likelihood of confusion between two allegedly similar marks. Eliminating a defendant’s ability to defend against an allegation of likelihood of confusion can be tantamount to establishing liability against the defendant. Yet, that will be the situation for many defendants following the U.S. Supreme Court’s March 24, 2015 decision in B& B Hardware, Inc. v. Hargis Industries, Inc. In that case, the Supreme Court held a defendant can be precluded from contesting “likelihood of confusion” if that issue, or a non-materially different issue, was previously decided between the parties in the Trademark Trial and Appeal Board (TTAB), a tribunal in the U.S Patent and Trademark Office (USPTO).

At first blush, the decision might not appear unusual. The doctrine of “issue preclusion,” a doctrine that prevents a party from relitigating an issue previously decided between parties, is long established law. TTAB decisions, however, are different for several reasons. First, the TTAB is part of an administrative agency (the USPTO), not part of the judicial system. Second, TTAB decisions are based on “the mark as shown in the application [for trademark registration] and as used on the good described in the application,” not the mark as actually used in the marketplace. Third, and perhaps far more significant in practical terms, many trademark registration proceedings in the past have been conducted under the assumption that the stakes involved in the proceeding were relatively modest. TTAB proceeds were viewed as relating to only to trademark registration issues, and not involving injunctive relief or monetary damages. After B&B, that isolation of a TTAB decision from injunctive relief and monetary damages, though still theoretically true, might become illusory.

After B&B, if another party opposes registration and the TTAB upholds that opposition because the mark sought to be registered is found to “so resemble” the other party’s mark “as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive,” 15 U.S.C. 1052(d), the party initiating the opposition might be able to bring a subsequent lawsuit against the applicant seeking an injunction and/or infringement damages. And under B&B, the applicant might be precluded from raising the defense of no infringement in the lawsuit. After B&B, the risk of not devoting all of one’s resources to an opposition proceeding in the USPTO has been elevated substantially. The consequence of losing an opposition before the TTAB might mean you are defenseless in a subsequently filed infringement lawsuit seeking injunctive relief and monetary damages.

Consider, for example, the consequences of defaulting in an opposition proceeding because you have decided that the benefits of obtaining federal registration are not worth the cost of fighting an opposition. In the past, the realistic maximum downside of such a decision might be limited to not obtaining federal registration for your mark. After B&B, though, the potential downside is far graver. It might mean you are defenseless against a lawsuit seeking injunctive relief and monetary damages. What about the common practice of fighting opposition proceedings with limited resources? What happens if you lose? Does it matter that the TTAB got it wrong because you didn’t turn over every stone in the opposition proceeding to prevail? Unfortunately for anyone inclined to hang onto old attitudes, that question is answered in the following admonishment from the Supreme Court in B&B: “issue preclusion prevents relitigation of wrong decisions just as much as right ones.” If you lose on the issue of likelihood of confusion before the TTAB, you might not get a second bite of the apple when sued for injunctive relief and monetary damages in a subsequent infringement lawsuit.

What can you do if you find yourself on the wrong side of a TTAB decision?

Fortunately, 15 U.S.C. § 1071 provides two options, albeit expensive ones, but only if you act promptly. If you think all necessary evidence was admitted before the TTAB, you have the option of appealing the decision to the United States Court of Appeals for the Federal Circuit. If, however, you believe additional evidence might be helpful, you also have the option of commencing a civil action in a federal district court, where the record can be supplemented. These options must be exercised within the appeal time for the TTAB decision, generally[A1] two months. Failure to file a time appeal or civil action may mean you will be prevented from contesting the issue in a subsequent lawsuit.

Though the precise parameters of when the doctrine of “issue preclusion” from TTAB decisions will apply in subsequent trademark infringement lawsuits must be resolved by the courts in subsequent litigation, this much remains clear: After B&B, the significance of prevailing or losing before the TTAB has changed dramatically, and one’s strategy in getting into, and out of, TTAB proceedings needs be carefully evaluated.

Porter Wright Morris & Arthur LLP

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